Purses, shoes and DVDs are still the most common counterfeits, but investigators are seeing more sinister fakes, too – like electric cords that easily catch fire, contaminated cosmetics, even fake prescription medicines. Now, some states are taking incredibly aggressive steps to stop them.

Operation Faux Pas

The North Carolina Secretary of State's office gathered police officers from across the state to launch Operation Faux Pas, a sting operation designed to nab suspected counterfeiters at a local flea market.

During a police briefing, Sgt. Henry King of the Rocky Mount Police Department explained the plan. "Around this area right here is where the DVDs, shoes and pocketbooks are going to be."

Officers have to catch vendors actually selling the fakes to press charges, so four undercover teams attend the flea market first.

"Sgt. King's team is going to make a buy - they're going to have the vendor under surveillance," said John Lynch, Special Agent in Charge with the North Carolina Secretary of State's office.

Why so aggressive? Because of one woman, Secretary of State Elaine Marshall.

"If we can make it, somebody can fake it," she said.

Marshall's office runs the most intense anti-counterfeiting operation in the country. They've seized more than $12 million worth of fakes in the past year alone.

Marshall says this is a global issue.

"It absolutely is. Organized crime has found that we as Americans, think it's funny to buy something that we clearly know is a knock-off," she said. "And we don't think any further than that. We don't understand-how did it get here? Who made it? Where is this cash money going?"

You can buy fake products at a fraction of the price, but at what cost? Marshall says some are dangerous, others made by child labor. Plus, North Carolina has seized illegal drugs and weapons that were shipped alongside the counterfeits.

'GMA' Goes Undercover

"We're seriously talking about organized crime. We're talking about Al Qaeda. We're talking about serious terrorists ... laundering things through South America and bringing them to America," she added.

Back at the flea market, "GMA" is undercover, too.

Suddenly, vendors start to pack up.

Some take off running, but they don't get far.

Meanwhile, some flea market patrons rush in to steal some of the vendors' abandoned merchandise.

If they spot enough counterfeit merchandise in a vendor's vehicle, they can confiscate that, too.

"You name it, they have it in there," Sgt. King said.

Police arrest six suspects in all. When "GMA" talks to them, most deny selling counterfeits or being part of a larger network.

Because of North Carolina's tough stance, they could face felony charges.

Authorities say often the vendors are low-level players forced to sell to pay off a debt.

Later, at a secret warehouse nearby, officers count and catalog all the merchandise that is now evidence in criminal cases.

The final tally? Alleged counterfeits with an estimated retail value of $712,395.00.

Web Extra Tips: How to Spot a Fake

Spotting a Fake Purse

Experts tell "GMA" that the best way to spot a fake purse is to look at the price. If you're paying way below what you think you should be paying, then it's probably a fake.

Retailers will only sell their products at their own stores, department stores, and official websites. A designer purse sold at any other location is most likely counterfeit.

Spotting a Fake DVD or CD

Below are tips -- provided by the Motion Picture Association of America-- for how you can spot a fake consumer DVD or CD:

Remember the adage "You Get What You Pay For": Even if you are hoping to get your favorite
movies or albums at a discount, new or used, extremely low prices might indicate illegal product.

Watch for Titles that are "Too New to be True": Movies that have yet to be released in theatres,
or which are still out in theatres, should/will not be available in the DVD format. If very recent
titles are being sold on the streets or through an auction or other online retail sites, they are most
likely illegal.

Watch for Compilations that are "Too Good to Be True": Many counterfeiters make "dream
compilation" CDs, comprised of songs by numerous artists on different record labels who would
not likely appear on the same legitimate album together.

Read the Label: If the true name and address of the manufacturer is not shown, it is most likely
not legitimate product. These products often do not contain a bar code. In addition, if anywhere
on the package it reads that the disc is an "All-Region," "0-Region," or "No Region" product, it's
highly likely that the CD or DVD is illegal. Furthermore, if the record label or movie studio listed
is a company you've never heard of, that should be another warning sign.

Look for Suspicious Packaging: Carefully look over the packaging and beware of products that
do not look genuine. Packages with misspelled words, blurry graphics, weak or bad color should
all raise red flags. Inferior quality print work on the disc surface or slip sleeve cover, as well as
the lack of original artwork and/or missing studio or label, publisher, and distributor logos on
discs and packaging, are usually clear indicators that the product is pirated. CDs and DVDs with
loose or no shrink wrap or cheaply made insert cards, often without liner notes or multiple folds,
are probably not legitimate product.

Watch for Product Being Sold in Unusual Places: CDs and DVDs sold in non-traditional
venues, like flea markets or on the street are probably not legitimate.
In addition to tips to avoid being duped by counterfeit product, the RIAA and MPAA offer a wide
array of legal, hassle-free services where fans can purchase their favorite movies and music at affordable
prices.